Members of the congressional supercommittee are facing a do-or-die week as they struggle to reach agreement on ways of finding ways to trim $1.2 trillion over 10 years from the federal budget.
If they fail to come to agreement within days, they are likely to spark a further downgrade of the nation’s credit, rating agencies warn.
But with Republicans insisting that all savings must come from cuts while Democrats still want tax increases which they say will raise more revenue, the two sides are still miles apart say insiders on Capitol Hill.
Officially the two sides have until Nov. 23 to come up with a deal that is acceptable to both Congress and the White House, but now Congressional Budget Office director Doug Elmendorf is insisting that he needs their proposals in the first week of November if his agency is to have enough time to cost out the programs.
Committee co-chairman, GOP Rep. Jeb Hensarling told Newsmax “every Democrat he has ever met” wants tax increases but he and his fellow Republicans will stick to their guns.
“Unless we reform current entitlement programs for the benefit of future generations, nothing the committee does really, at the end of the day, will solve the problem,” he said.
“There is only one thing that counts,” the Texas congressman added. “That is finding quality healthcare and quality retirement security at a cost that doesn’t bankrupt our children.
“Medicare, Medicaid, social security, federal retirement, all of that is growing at 5, 6, 7 percent a year, but the economy chugs along right now at 1-2 percent a year.”
The committee – made up of six Democrats and six Republicans, three of each from either House – was set up in August. Members were told that if they failed to reach an acceptable solution cuts would automatically come in, half from the military budget and half from domestic programs.
It was hoped that the two sides would be forced to compromise as Republicans would not want to see defense spending slashed and Democrats would do whatever they could to save Medicare, Medicaid, and social security.
But as the deadline gets closer, the political realities of slashing the military budget by 16 percent and explaining why social programs have been cut in an election year are hitting home. If that decision is put off the chances are that rating agencies Moody’s and Fitch could follow Standard and Poors in downgrading the nation’s credit, hurting the economy still further.
House Speaker John Boehner said on Thursday that the trigger-effects were unacceptable. “It’s important for the supercommittee to meet its goals,” he said, according to Politico. “I expect that it’s going to be very difficult to get to an outcome, but I am committed to getting to an outcome.”
But pessimism is rife. “We expect at least one credit downgrade in late November or early December when the supercommittee crashes,” wrote Ethan Harris, an economist at Merrill Lynch.
There has been criticism of the committee from the start. During a GOP presidential debate before it had even met, former House Speaker Newt Gingrich called it, “about as dumb an idea that Washington has come up with in my lifetime.
“The idea that 523 senators and congressmen are going to sit around for four months while 12 brilliant people – mostly picked for political reasons – are going to sit in some room and brilliantly come up with a trillion dollars, or force us to choose between gutting our military and accepting a tax increase, is irrational.”
Gingrich has been proved right as party leaders are inserting themselves more and more into the process. The Washington Post’s Wonkbook blog reported that Senate Leader Harry Reid had reached out to Boehner and Senate Minority Leader Mitch McConnell and they had met with Hensarling and his co-chair Sen. Patty Murray, D-Wash.
“The politics for both parties – and the leaders themselves – are very delicate,” Wonkbook said.
The Wall Street Journal confirmed that party leaders were getting more involved, saying they would have to be consulted if either side was going to compromise. "We're getting to the point where leadership is getting more engaged," a Democratic Senate aide told the paper.
A bipartisan group of House members has prepared a letter urging the committee to go big and is hoping for at least 100 Congressmen to sign it before its release next week. Co-author, Rep. Mike Simpson, R-Idaho, told the Washington Post, “We’re trying to give them a shot in the arm.”
Democrats came up with what they called a “grand bargain” on Wednesday with cuts that they said would amount to more than double the $1.2 trillion figure. They said their deal was based on subjects discussed by Boehner and President Barack Obama over the summer.
But Republicans immediately slapped the plan down saying it wasn’t a serious proposal as it included $1 trillion in tax increases. “It is ridiculous, nothing more than political posturing,” an unidentified Republican aide told the New York Times.
The GOP’s counter-plan calls for $2.2 trillion in cuts tied to extra revenue of $640billion through various fee increases including a raise in Medicare premiums.
Committee members insist they will keep on negotiating. Sen. John Kerry, D-Mass., said, “We will negotiate until we don’t negotiate…. We have to negotiate. That’s our job.” And Hensarling told Newsmax they are “meeting hours every day.”
The one thing the committee has been successful in is keeping its work under wraps. Until Wednesday’s open session, few people outside the membership have had any idea what, if anything, has been decided.
Some reports suggest that individual members of the committee have been working on different aspects of a deal. Senate Finance Committee Chairman Max Baucus, D-Mont., and House Ways and Means Chairman Dave Camp, R-Mich., are said to be talking about an overhaul of the tax code.
But Wednesday’s session revealed just how far the two sides are apart and how quickly they need to bridge that gap.
“They’re gridlocked,” Greg Valliere, chief strategist at the Potomac Research Group told Bloomberg Television. And he warned, “The level of partisanship is really about to ratchet up.”
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